Auto industry hails GST reduction on electric vehicles

Society of Indian Automobile Manufacturers (SIAM) welcomed the government’s decision to reduce the GST rate on electric vehicles from the present 12% to 5%. Rajan Wadhera, President, SIAM said, “Government’s vision of increasing electric mobility in the country has been acknowledged by GST council by significantly reducing GST rate on electric vehicles. We are thankful to the GST council for accepting these recommendations which were proposed by SIAM in our white paper which was released last year to promote the growth of electric vehicles in India.”

To be effective from August 1, the GST council has also announced that tax on EV chargers will be reduced from 18% to 5%. The local authorities have also been given GST exemption for hiring of electric buses by local authorities. Wadhera also said, “Over the years, this will help popularise electric vehicles and increase penetration in the country.”

Wadhera congratulated the government on this bold initiative and pointed out that there is a need for a long term unambiguous EV roadmap. He also mentioned that the automotive industry is currently going through a difficult time and SIAM has requested for government intervention to stimulate demand so that the industry can turn around from the current difficulties.

HERO ELECTRIC INDIA:  “After the reduced subsidies and duty changes in FAME 2, the price of affordable segment Electric vehicles had gone up by around 20%. Reduction in GST is a very positive and a welcome move, as it will reduce the prices by 7%. This move also sends clear signals to the Industry on government’s seriousness in promoting EVs. However even after the GST reduction, the prices of the affordable segment EVs will still be much higher than IC engine vehicles and will remain the biggest stumbling block for purchase.

“The Industry and the Government must work together to create price parity at-least for 2 to 3 years so as to trigger mass adoption.  Some of the steps requested by SMEV are- Subsidy on all the EVs should be Rs 20000/Kwhr of battery as it is for the buses; financing by Public sector banks; mandating businesses that use polluting vehicles for their operations to switch to electric and a major awareness campaign on the benefits of EVs by the government under "Swachh Bharat" initiative. The GST on the spares batteries is still 18% and that should also be brought down to 5% to ensure that the EV users continue to enjoy the low running cost advantage,” said Sohinder Gill, CEO of Hero Electric India

VOLVO CAR INDIA: Sudeep Narayan, Director, PR and Corporate Communication, Volvo Car India, “The reduction of GST rate on electric vehicles and chargers to 5% is a positive sign to encourage the adoption of electric mobility in the country. However, EVs and related infrastructure go hand-in-hand. Setting up of charging stations should also be fast tracked at the same time. It would be good if the construction industry helps in setting up the charging points not just at commercial spaces, but at residential areas too.”

OKINAWA AUTOTECH: Jeetender Sharma, Founder & MD, Okinawa Autotech Pvt Ltd said, "We welcome the GST Council’s decision to slash the GST on electric vehicles. The 7 percent tax reduction on EVs along with the tax rebates proposes in Union Budget will definitely encourage the shift towards electric mobility. These positive steps by Government have created a positive ecosystem for faster adoption of electric vehicles in India".

GREAVES COTTON: “The reduction in GST is on expected lines and a logical extension of government's electric push. This along with other EV friendly measures will push the industry onto fast lane and promote greater adoption by end user as means to affordable last mile mobility. We look forward to India's rise as an EV manufacturing hub and we will continue to play an important role in this transformation," said Nagesh Basavanhalli, MD & CEO, Greaves Cotton.

AVAN MOTORS: "Ensuring continuity in the government’s commitment to accelerate the growth of sustainable mobility ecosystem in the country, GST Council's decision will bring an end to the wait-and-watch stance that the industry was taking so far for the reason of lack of clarity on the future policy initiatives towards EVs and the related support system. What started with FAME II, followed by the budgetary benefit by the Finance Minister extending tax benefit of Rs 1.5 lakh on the interest paid on the loans taken for the purchase of the electric vehicles, the GST Council's decision to reduce the rate on electric vehicles and chargers to 5 percent has clearly established the Government's intention of a long term view towards the segment. Reciprocating to these announcements, we assure of our commitment aligned with such initiatives by bringing state of the art products and technologies to the market," said. Pankaj Tiwari, India Business Head - Avan Motors.

AUDI INDIA: Rahil Ansari, Head, Audi India said that the “lowering of the GST rate on electric vehicles (EV) from 12% to 5% is definitely going to give a boost to EVs in India and we are confident that that it will motivate customers looking for both entry-level EVs as well as luxury EVs that will enter the market. We are pleased that this coincides with our plans for introducing the Audi e-tron in India by the end of this year.”

“The government has also placed special emphasis on development of necessary charging infrastructure during the union budget announced recently which shows its seriousness towards growth of electric vehicles in India.

“While these are great steps for the future, short-term measures supporting the overall industry, also the luxury segment, are required by the Government. All players are struggling with declining sales which in turn is leading to production cuts and may lead to job losses, too. The draft notification on hiking registration for ICE vehicles is detrimental to the overall development. It’s high time that short term actions are being taken by the Government to help the industry overcome this phase and contribute in the long run. We need support not penalties,” he added.

ATHER ENERGY: Tarun Mehta, CEO and Founder, Ather Energy said, “The Union budget gave a much-needed push to the EV industry and the outcome of the GST Council meeting is even more welcoming. The reduction of GST rates from 12% to 5% reduces the upfront cost of buying a vehicle by Rs 8000-10,000. Compounded by the tax rebates offered in the Union Budget, today electric vehicles are an affordable upgrade from existing ICE options.

“Along with the vehicles and chargers, a GST reduction on using public charging network should have also been considered. Though today we offer free charging for all electric 2Ws and 4Ws, consumers will have to begin paying 18% GST in the coming months. Offering preferential electricity rates along with a lowered GST rate, will make owning EVs more affordable and will increase adoption.

“As a manufacturer, we would like the Centre to review the current taxation framework applicable on raw material and the final product. There is an inherent inverted duty structure as the GST input on raw material and other overheads are on average of 18 % wherein the output is now going to be pegged at 5%. This structure results in significant working capital blockage. Even with the existing GST inverted duty refund framework in place, there is working capital blockage on the overheads and capital investments. A comprehensive GST refund structure of electric vehicle manufacturers or a reduced GST liability on the raw material should be assessed for seamless cash flows in the long run.”

GEMOPAI ELECTRIC : "We at Gemopai, welcome the Government's move on reducing the GST on EVs to 5% from 12%. This move will increase the confidence of potential customer and help accelerate the adoption of EVs in the country. This is also a great booster for all manufacturers aligned to make electric mobility a reality and India pollution free.

“As a catalyst of growth of EVs in India, Gemopai will pass this entire benefit to the customer on our existing and two new models, that will be launched later this month. We just wrapped up meeting our vendors and dealers across the country to prime our production as well as sales & service network to support more high speed models with portable Li-Ion batteries,"  said Amit Raj Singh, Co-Founder, Gemopai Electric Gemopai Electric is a joint venture between Goreen E-Mobility founded by Amit Raj Singh and Bhanu kumar in 2016 and Opai Electric which is one of the largest manufacturers of electric vehicles.

PANASONIC INDIA: Manish Sharma, President & CEO, Panasonic India & South Asia, said “Lack of a proper infrastructure has been a major impediment in ensuring wide scale adoption of EV’s in India. The emphasis laid by the government to improve the electric mobility ecosystem in the country has seen yet another push with its decision to lower the GST rates from 12% to 5% on electric vehicles and 18% and 5% on the charging stations. This will not only provide the necessary impetus to EV adoption but also facilitate in strengthening the EV charging infrastructure in the country. The decision to exempt GST in the hiring of electric buses of carrying capacity of more than 12 passengers by the local authorities will give the necessary thrust in raising more awareness about EV’s. The landmark announcements will also help lay the foundation in creating a manufacturing ecosystem for the EV sector in India.”